Legal Practice Notes

Introduction to the Insurance Act 2015 The Insurance Act 2015 ( IA 2015) was granted Royal Assent on 12 February 2015 and, save for Part 6, commenced on 12 August 2016. It marks the most far-reaching overhaul of the statutory framework of English insurance contract law since the Marine Insurance Act 1906 ( MIA 1906). This Practice Note examines the principal provisions of IA 2015 and the ways in which they reform the law. It also reviews reforms introduced by the Enterprise Act 2016 ( EA 2016), with relevant sections taking effect in May 2017. This Practice Note addresses IA 2015 provisions relating to: the duty of fair presentation remedies for a breach of that duty warranties and other terms fraudulent claims amendments to the Third Parties ( Rights Against Insurers) Act 2010 ( TP( RAI) A 2010) ...

The Insurance Act 2015 ( IA 2015) obtained Royal Assent on 12 February 2015 and, save for Part 6 of the Act, took effect on 12 August 2016. It marks the widest overhaul of the statutory regime governing English insurance contracts since the Marine Insurance Act 1906 ( MIA 1906). For fuller commentary on IA 2015, refer to Practice Note: Insurance Act 2015 ( IA 2015)—essentials. Below we address some frequently asked questions ( FAQs) concerning IA 2015... What is the IA 2015 and when did it come into force? IA 2015 is the most far-reaching reform of English insurance contract law since MIA 1906. It secured Royal Assent on 12 February 2015 and, except for Part 6, commenced on 12 August 2016. The Act reshaped rules on fair presentation, remedies for non-disclosure and...

What is insurable interest? This Practice Note examines insurable interest, including its role in construction and liability insurance. It also addresses insurable interest in subrogation, co-insurance and double insurance, and the Insurable Interest Bill. It is a doctrine of insurance contract law that requires the insured to have a legally recognised relationship with the insured subject-matter. Broadly, only those who have some connection to the subject-matter of the insurance contract, by which they would be prejudiced by its loss, or may incur liability in respect of it, can insure that subject-matter. Conversely, a person who lacks such a relationship has no insurable interest and therefore cannot take out insurance on that subject-matter. The burden lies on the insured to establish that an insurable interest exists. The rationales for requiring an insurable interest are that: it is the characteristic of an insurable interest that...

This Practice Note sets out recommended steps and suggested procedures for assessing and overseeing third parties, such as barristers and experts, that your firm instructs on client matters. This differs from introducing your client to a third party, for example a financial adviser or another lawyer—see the separate Practice Note: Introductions to third parties. Difference between instructing a third party and introducing a client to a third party The SRA Code of Conduct for Solicitors, RELs, RFLs and RSLs ( Code for Individuals), together with the SRA Code of Conduct for Firms ( Code for Firms), sets particular duties in relation to ‘referrals, introductions and separate businesses’. Although not entirely definitive, the language used in the Codes appears to suggest that these obligations apply when you refer or introduce your client to external third parties (or when receiving referrals from such third parties), rather than when simply...

When is it necessary to instruct a psychiatrist? Psychiatrists are often invited to evaluate the decision‑making capacity of protected persons ( Ps) who are the subject of proceedings before the Court of Protection. They are, on occasion, asked as well to offer a view on P’s best interests. For further guidance on mental capacity, see Practice Notes: Mental capacity—an introduction and Mental capacity—assessments and tests. It should be clearly recognised from the outset that instructing a psychiatrist is not invariably required in order to assess capacity. Capacity evaluations may properly and safely be undertaken by a broad range of professionals, including psychologists, general practitioners ( GPs), social workers, and speech and language therapists. In some matters, particularly where P’s capacity is borderline or fluctuating, instructing a psychiatrist to assess capacity can prevent significant delay and wholly unnecessary cost. This is especially true where the...

This Practice Note This Practice Note sets out key points when appointing an expert under CPR 35 and the Guidance for the instruction of experts in civil claims. It emphasises choosing the right moment to engage an expert, with pointers on matters to weigh up, particularly where instruction is contemplated before issue of the claim form. It also offers practical help on preparing the letter of instruction and any supporting materials. It covers dealings with experts, including questions of privilege. When instructing experts you should have regard to: all pertinent CPR Rules and Practice Directions the Guidance for the instruction of experts in civil claims (“the Guidance”). See Practice Note: under the Guidance for the instruction of experts in civil claims the Practice Direction Pre- Action Conduct and Protocols, para 7, and any other protocol applicable to the claim type any other guidance relevant to their...

Given the complexities of construction works and disagreements, calling on a specialist in the relevant discipline is frequently essential. The Technology and Construction Court Guide ( TCC Guide) acknowledges this, and also notes that parties often need to retain experts at a very early, pre-action stage. Experts may equally be engaged outside litigation, for example to assist in identifying liability at the outset of a claim, to provide opinions on remedial options, or to support adjudications and other dispute resolution processes, including negotiation, mediation and arbitration. This Practice Note addresses key matters arising once the choice is made to appoint an expert (whether as an expert adviser or expert witness), such as the timing of the instruction, the contents and scope of the instruction letter, and the documentation to be provided. For details on the obligations an expert may have, see Practice Notes:...

This Practice Note is for law firms and individuals regulated by the SRA. It reviews the requirements in the SRA Codes of Conduct when instructing third parties. A separate Practice Note covers situations where clients are sent to you by third parties—see Practice Note: Referral and fee sharing arrangements. See also section: Difference between instructing and introduction to a third party and separate Practice Note: Introductions to third parties. SRA regime The SRA's core regulatory requirements are contained in the SRA Code of Conduct for Solicitors, RELs, RFLs and RSLs ( Code for Individuals) and the SRA Code of Conduct for Firms ( Code for Firms), and should be read in the context of the SRA Principles. Difference between instructing and introduction to a third party The SRA Codes of Conduct impose specific obligations concerning ‘referrals, introductions and separate businesses’. Although not completely clear, the wording of the Codes...

Because many banking transactions cross borders, it is routine for the principal legal advisers to lenders/creditors and borrowers/obligors to engage local lawyers for guidance on local law. This Practice Note offers practical guidance on instructing and supervising local counsel and covers: the role of local counsel instructing local counsel as principal legal advisers for lenders/creditors or borrowers/obligors the role of the principal legal advisers in managing local counsel Role of local counsel When to appoint local counsel As a rule, local counsel should be appointed whenever: the client requires local-law advice documents must be prepared and/or executed under a law other than that of England and Wales any English law-governed document is to be entered into by a foreign company Instructing a local firm may not be needed if the principal firm has lawyers in that office who are...

What is institutional arbitration? An institutional arbitration is a process managed by an arbitral body selected by the parties, and conducted under that body’s arbitration rules as agreed by the parties. The term institutional arbitration is also known simply as administered arbitration......

Test of insolvency Section 421(4) of the Insolvency Act 1986 ( IA 1986) sets out the statutory yardstick for deciding whether a deceased’s estate is insolvent: an estate is insolvent where, once every asset has been realised, the proceeds are insufficient to discharge in full all debts and other liabilities attaching to the estate. By contrast, an estate is not insolvent if all debts and liabilities can be paid, even where no legacies are capable of being honoured. In a genuinely insolvent estate, beneficiaries take nothing, and the debts and liabilities will not be settled in full, if at all. For illustration, Elizabeth’s estate comprises a single bank account holding £50,000. There is no IHT to pay because the full basic nil rate band is available. A funeral plan exists to cover the funeral expenses. The estate’s debts and liabilities total £12,000. Under her Will,...

This Practice Note offers direction on taking enforcement action within the care home sector. It explores approaches to shape the sale of an insolvent care home business with regulatory hurdles in mind and signposts risks. It also outlines considerations when preparing a sale agreement for an insolvent care home. The enforcement and sale journey for distressed care homes can be lengthy and strewn with pitfalls. Although this Practice Note points to core matters needing attention, each situation will present its own distinct challenges. Insolvency and the care home industry—overview Care homes provide housing and personal support for those unable to live independently. Some also deliver care from qualified nurses or specialise in serving particular groups, such as younger adults with learning disabilities. The industry as a whole has suffered significantly in recent years. Challenges persist in parts of the market, especially at the smaller end,...

Introduction to SPVs What is an SPV? ' SPV' means 'special purpose vehicle'. An SPV is a corporate entity, commonly with limited liability status, incorporated specifically to undertake a structured finance transaction in a selected legal jurisdiction and with an appropriate ownership set-up which, for tax, regulatory and/or accounting reasons, produces overall favourable treatment for the transaction it has been created to execute. SPE (special purpose entity) and SPC (special purpose company) describe essentially the very same idea. ( SPV, SPE and SPC can also denote 'single purpose vehicle', 'single purpose entity' and 'single purpose company' respectively). Under Regulation ( EU) 2017/2402 (the EU Securitisation Regulation) and UK securitisation rules, SPVs are termed securitisation special purpose entities ( SSPEs) under those regimes. SPVs are most frequently employed, in practice, as financing vehicles (typically, issuers of securities) in structured finance deals (such as...

General Set-off grants one party, Party A, who is owed money by another, Party B, the means to secure payment by setting off the sum owed through a reduction of Party A’s separate liability to Party B. Consequently, where a creditor and debtor have had mutual dealings, the creditor is entitled to set-off against the debt they are owed any amount that they owe to the debtor. The rules for administration set-off and liquidation set-off are contained in the Insolvency ( England and Wales) Rules 2016 ( IR 2016), SI 2016/1024, rr 14.24 and 14.25, respectively. The rules governing bankruptcy set-off are found in section 323 of the Insolvency Act 1986 ( IA 1986). Under insolvency set-off, an account is taken of what is due from each party to the other in respect of their mutual dealings, and the sums owed by one party to the...

No individual may act as an insolvency practitioner ( IP) for another at any time unless both: security is maintained for the proper discharge of their functions, and that security satisfies the prescribed conditions for acting in relation to that person This framework exists to safeguard creditors and other interested parties against losses caused by the IP’s fraud or dishonesty, or the fraud or dishonesty of another committed with the IP’s connivance. The expense of putting this security in place is treated as a cost of the insolvency proceedings. Security requirements Terms of the bond The required security is a bond approved by the Secretary of State which must: be in writing or electronic form, include provision whereby a surety undertakes joint and several liability for losses relating to the insolvent debtor arising from the fraud or dishonesty of: ...

This Practice Note sets out the following facets and issues concerning an office-holder’s exposure to adverse costs in litigation: the overall position where an office-holder is a claimant or a defendant in proceedings the office-holder’s entitlement to reimbursement from the insolvent estate the possible costs implications of discontinuing a claim the potential ranking of any adverse costs order the personal exposure of office-holders for adverse costs security for costs The general position if an office-holder is a claimant or defendant in litigation If an office-holder issues proceedings in their own name, they proceed entirely at their own risk as to costs. Should a costs order be made against them, they are personally liable and cannot confine that liability to the extent of assets available in the insolvent estate ( Re Wilson Lovatt & Sons). However, unless the court directs otherwise, they will have a right to reimburse the amount of any...

Applicable law The common law prior to the Insolvency Act 1986 ( IA 1986) embraced a pragmatic rule: when dealing with the estates of an insolvent partnership and its partners, liabilities of the firm should be discharged from firm assets, whilst a partner’s personal liabilities should be satisfied from that partner’s own assets. This rule of convenience kept firm and personal funds separate at first instance, and guided the conduct of overall administration. Where either estate proved insufficient, any shortfall was to be met from any surplus available in the other estate or estates (see Re Rudd & Son). This Practice Note considers the regime relevant to matters within the ambit of the Insolvent Partnerships Order 1994 ( IPO 1994), SI 1994/2421. For guidance on what amounts to partnership property in a general partnership, see Practice Note: The nature of a general...

Funders regard insolvency disputes as compelling for the following reasons: claims typically display clear causation and are underpinned by strong documentary evidence and records insolvency practitioners ( IPs), acting as officers of the court, bring credibility and rigour to the process financial recoveries can be substantial, especially in cases involving director misconduct or asset tracing This Practice Note discusses seed funding and portfolio funding in detail. For further reading on third party litigation funding more generally, please consult the following Practice Notes set out below: Third party litigation funding—a guide for dispute resolution practitioners Third party litigation funding for insolvency practitioners Third party litigation funding process for insolvency practitioners Funding and litigating a claim vs selling or assigning a claim Litigation funding agreements—pricing Litigation funding...

This Practice Note briefly explains insolvency issues in PFI/ PF2 projects. It is designed to give restructuring and insolvency practitioners a concise, high-level overview of key contractual terms, restructuring routes, and steps that may safeguard a client’s position, presented in a practical format in routine professional practice. What are PFI/ PF2 projects? The Private Finance Initiative ( PFI) is a form of public–private partnership ( PPP) used to commission and deliver a range of public assets and services, such as schools, hospitals, prisons, rail links, roads and social housing across the public sector. PFI schemes are financed by private sector lenders, with private contractors assuming the burden and risk in relation to design, construction and/or day-to-day operations. A typical PFI arrangement is long term, enduring for around 25–30 years. Private Finance 2 ( PF2) was launched by the government in December 2012 with the intention of...

ARCHIVED: This archived Practice Note outlines the Insolvency Express Trials pilot, which operated from 1 April 2016 until 6 April 2020. This Practice Note is archived. It describes the scheme in outline. With effect from 1 April 2016, Civil Procedure Rules Practice Direction 51P ( CPR PD 51P) took effect, setting out the detail of the new pilot labelled Insolvency Express Trials ( IET). The CPR Committee approved the IET pilot on 4 December 2015. Any paragraph references in this Practice Note are to the paragraphs of the PD. For an interview with the then Chief Registrar, Stephen Baister, about IET, see News Analysis: Insolvency Express Trials pilot scheme. Please note that, since the IET pilot began, two relevant changes have arisen: first, the introduction of the Business and Property Courts of England and Wales ( B& PCs). Insolvency and Companies Act...